China dropped import duties and value-added tax (VAT) for a variety of equipment, including for solar cells and lithium-ion batteries on April 1, thus sending a "positive signal" to the China-Europe trade negotiations.

The list of tax exempt items is composed of raw materials and equipment parts that the country cannot produce.

Flickr/Renato Ganoza

According to a statement released by China’s Ministry of Finance, the list of tax exempt items is composed of raw materials and equipment parts that the country cannot produce. However, the ministry did not specify what kind of photovoltaic equipment will be exempt.

"As from April 1, 2013, the exemption from import duties and value-added tax (VAT) may be granted to the importing key parts and raw materials that are necessary to the state-supported manufacturing of … solar cell equipment … [and] li-ion power batteries," read a translation of the statement, published on Chinese tariff website, ETCN.

Importers can register with customs and tax authorities for a tariff exemption review from April 1 to 30.

Positive signal

With this new development, "China is sending a positive signal to Europe and is showing that it doesn’t want the trade cases conflict to escalate," Stefan de Haan, PV senior analyst at IHS Solar told pv magazine. However, at the same time, it is also "asking the West not to be too harsh with their anti-dumping measures," he added.

Last month, Chinese Commerce minister Chen Deming called on Europe to "properly handle the solar panel friction with China to avoid greater losses for both sides."

During the annual session of the National People’s Congress, Chen said that the trade dispute was a consequence "of the debt crisis that cut government subsidies to solar energy in Europe and the anti-dumping and countervailing duties" imposed on PV imports from China, reported the Chinese news agency Xinhua.

According to data from China’s Ministry of Commerce, more than 90% of Chinese photovoltaic products are exported; 70% is sold to Europe, while 10% goes to the United States.

Moreover, China’s Ministry of Commerce published on its English website a short Q&A with reporters on March 25. In it, deputy China International Trade Representative and Vice Minister of Commerce, Chong Quan said that China’s exports of PV products in 2012 decreased by 35%, of which export of solar cells and the subassemblies decreased by over 40%.